Should I decrease the rent?
My father rented a 6 bedroom, 3 bath home to 10 people before he passed away last year for 3,100/month. Now that the lease is expiring soon ,the tenants are asking for a rent decrease because five people will move out. The tenants are good so far and have been living there since 2022. The tenants are on a fixed income and were getting help from the other five family members for the 3,100 rent. The market rate seems to be at or more than 3,100. Should i call a property manager?
@Shivani Kumar NO! If you can get $3100 or more then rent it out to someone else that is better qualified. Do NOT fall in love with your tenants. Treat it as a business.
Good Investing...
Hi Shivani,
I'm assuming the 3.1k/month is a market rent? It's completely reasonable to rent it for market rent, and it would be better to find other tenants if they cannot pay.
Nope.... the rent is for the unit..... not the number of tenants in it. So they can replace the people that move out with people you approve of after proper screening..... keep the same number of people and now the total rent is split between them, so the per person goes up..... or they all move out and you start all over to rent it at current market rate.
Quote from @Ko Kashiwagi:
Hi Shivani,
I'm assuming the 3.1k/month is a market rent? It's completely reasonable to rent it for market rent, and it would be better to find other tenants if they cannot pay.
Hello, Ko
Sounds like a good idea! Thank you
#3 Managing Your Property Contributor
If there are 10 adults living in a house, they should be able to afford the rent. Even if 5 move out, then they don't need a 6 bedroom house-if the 5 that remain can't afford the rent, then they should move to a smaller place.
#2 Contractors Contributor
- Severna Park, MD
And after you would lower the rent , whats stopping the same people moving back in ?
Quote from @Joe Homs:
@Shivani Kumar NO! If you can get $3100 or more then rent it out to someone else that is better qualified. Do NOT fall in love with your tenants. Treat it as a business.
Good Investing...
Thank you for the response!
Quote from @Theresa Harris:
If there are 10 adults living in a house, they should be able to afford the rent. Even if 5 move out, then they don't need a 6 bedroom house-if the 5 that remain can't afford the rent, then they should move to a smaller place.
That is true. I was quite worried about the rent lost if i were to put it back on the market. I offered them 3,000 and kind of regret it now.
#3 Managing Your Property Contributor
Quote from @Shivani Kumar:
Quote from @Theresa Harris:
If there are 10 adults living in a house, they should be able to afford the rent. Even if 5 move out, then they don't need a 6 bedroom house-if the 5 that remain can't afford the rent, then they should move to a smaller place.
That is true. I was quite worried about the rent lost if i were to put it back on the market. I offered them 3,000 and kind of regret it now.
Next year, increase the rent to $3200 (if the market supports it).
NO, don't lower the rent! Since they no longer need so many rooms and cannot afford it, they should look for a place that better suits their needs. Find more qualified tenants and raise the rent to market or just below. We are not in the business of subsidizing tenant's rent. Over time, you will be losing out on revenue and just prolonging the inevitable move out when they can no longer pay the rent. Remember this is a business nothing personal. Good luck to you!
Quote from @Matthew Paul:
And after you would lower the rent , whats stopping the same people moving back in ?
Good point!
Quote from @Sandy G.:This makes a lot of sense considering they are haggling on a market rent rate. Thankfully, I didn’t go too low! Thank you!
NO, don't lower the rent! Since they no longer need so many rooms and cannot afford it, they should look for a place that better suits their needs. Find more qualified tenants and raise the rent to market or just below. We are not in the business of subsidizing tenant's rent. Over time, you will be losing out on revenue and just prolonging the inevitable move out when they can no longer pay the rent. Remember this is a business nothing personal. Good luck to you!
Quote from @Matthew Paul:
And after you would lower the rent , whats stopping the same people moving back in ?
Nailed it! Time to raise the rent , btw.
#1 Managing Your Property Contributor
- Property Manager
- Metro Detroit
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#1 Managing Your Property Contributor
- Property Manager
- Metro Detroit
@Shivani Kumar tenants always try to make their problems the landlord's problems.
That's why they are tenants!
There is a business decision here though.
Calculate the cost to RentReady the home and the cost of vacancy while finding a new tenant. Divide these costs by the difference between market rent and the rent the tenants want to pay. This will tell you how many months it will take to "break even". If it's more than 12 months, you may be better off finding new tenants.
@Shivani Kumar You asked at the start of this post "do I need a property manager?"
If you can commit that when you're interacting with tenants in the field that if they ask you for something you can say "let me make a note of your request and I'll have an answer for you in a day or two" AND no telephone contact with the tenants then continue doing it yourself.
If you must be the on-the-spot final decision maker and are also the sort of person that can be talked out of $1200 per year without giving yourself time to think through your options or come here for advice then please hire a manager.
No request, no matter how small it seems gets an instant response!!! Remember the tenants were discussing amongst 10 people how to play that with you for months.
I will rent it for $3,500. I will pay 3 months in advance.
You will not hear from me about little maintenance issues. I will pay all maintenance costs under $500.
The house will always be kept in great condition. You can visit and check the condition anytime.
I agree with Melanie that you should do what you can to not answer questions on the spot. Another great way to prevent this is to use and commit to a property management system. Then you aren't fielding random phone calls and can respond during business hours. As to your question about the rental price - look at comparable rentals and let that help you decide. If you feel the need to explain yourself you could always use the "Binder Method" where you walk through comps with them to help them understand where the number is coming from. Good luck!
I agree. DO NOT answer questions on the spot even if pressed to do so. You could say something like “let me run this by my partner/associate and get back with you.” Don’t lower your standards for anyone. They WILL NOT and I mean NOT appreciate it and you are the one that ends up losing something. Also NEVER mention even in passing something you would like to do to the property like “I really would like to install new windows or repaint the exterior of the house,” etc. because the tenants will pester you about it until you do. Funny how tenants want you to spend time and money making upgrades and they reward you by not taking care of the property.